Landfill agency could recoup $27M of lost $75M

JOHNSTON, R.I. (WPRI) – The quasi-public agency that runs the state landfill is on track to recoup up to $27 million of the $75 million it lost during nearly a decade of alleged mismanagement and insider deals, its executive director said Thursday.

Michael O’Connell, executive director of the R.I. Resource Recovery Corp., said as of last summer the agency had already recovered $21 million from seven or eight legal settlements related to its troubled past, and could win as much as $6 million more thanks to a jury verdict this month.

“We should end up recovering about one-third of the money,” O’Connell told WPRI.com.

A jury recently awarded the agency $2.86 million in a lawsuit filed against its former accounting firm, Restivo Monacelli, which O’Connell estimated could come to as much as $6 million with interest if the verdict holds up on appeal. The verdict, which Restivo plans to challenge, was first reported by The Providence Journal.

O’Connell was hired from out of state to lead the landfill agency in January 2007, and quickly discovered what he suspected to be widespread mismanagement and, in some cases, financial misconduct. Two audits ordered by Gov. Don Carcieri eventually revealed an estimated $75 million in losses from mismanagement over a period of eight years.

“Much of the infamous $75 million was not recoverable,” O’Connell explained in an email earlier this year. “Some of what happened was plain old mismanagement/incompetence and not outright theft. In other cases people died, went bankrupt/had no insurance, or the statute of limitations expired, etc.”

“However,” he added, “where there was corruption or cronyism and some potential for financial recovery, we went after them.” The agency began pursuing legal action in 2010 against some of those involved, state documents show.

O’Connell declined to name the parties in the various legal settlements the agency has reached, saying the agreements contained “very tightly worded” confidentiality agreements that his lawyers need to review. The Restivo suit is the agency’s last unresolved legal complaint related to the lost $75 million.

O’Connell said he felt “vindicated” by the tens of millions of dollars in legal settlements, despite the fact that no law enforcement agency ever filed charges stemming from the landfill scandal.

“I know it wasn’t pursued by the state because – who knows why?” he said. “They said they didn’t have subpoena power. I think it was something other than that – I think it was more involved than that, and that’s why they didn’t pursue it.”

The agency isn’t keeping all the money it has gotten back, however. Its agreement with the law firm handling the matter, K&L Gates LLP, allows the lawyers to keep 30% of what they win, O’Connell said. In addition, lawmakers used $3.5 million of the money to balance the state budget back in 2011, he said.

Out of the $21 million recovered as of last summer, the Resource Recovery Corp. netted almost $13 million, according to O’Connell. The money has been used in recent years to continue a freeze in the fee paid by municipalities to drop trash at the landfill.

The municipal fee, known as a “tipping fee,” has been set at $32 a ton for the last 25 years, but O’Connell said he expects it will have to be raised during the fiscal year that starts in July 2017. A final decision on how high to raise it won’t be made for another year or so, he said.

O’Connell said he hopes a final decision will be rendered on the Restivo case within the next year, ending the saga once and for all. “We just want to get on with our lives and quit looking backwards,” he said.Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter: @tednesi Tim White (twhite@wpri.com) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @TimWhiteRI

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